Deutsche Bahn Interim Report January – June 2017 Quality that persuades ! At a glance H 1 Change Æ † Selected key figures [€ million] 2017 2016 absolute % KEY FINANCIAL FIGURES (€ MILLION) Revenues adjusted 21,070 20,033 + 1,037 + 5.2 Profit before taxes on income 733 563 + 170 + 30.2 Net profit (after taxes) 779 603 + 176 + 29.2 EBITDA adjusted 2,574 2,415 + 159 + 6.6 EBIT adjusted 1,179 1,007 + 172 + 17.1 Equity as of Jun 30/Dec 31 13,446 12,744 + 702 + 5.5 Net financial debt as of Jun 30/Dec 31 19,030 17,624 + 1,406 + 8.0 Total assets as of Jun 30/Dec 31 56,102 56,623 – 521 – 0.9 Capital employed as of Jun 30 34,581 33,462 + 1,119 + 3.3 Return on capital employed (ROCE) (%) 6.8 6.0 – – Redemption coverage 1) (%) 19.3 17.5 – – Gross capital expenditures 4,108 3,472 + 636 + 18.3 Net capital expenditures 1,490 1,346 + 144 + 10.7 Cash flow from operating activities 762 1,523 – 761 – 50.0 KEY PERFORMANCE FIGURES Passengers (million) 2,355 2,190 + 165 + 7.5 RAIL PASSENGER TRANSPORT Punctuality DB passenger transport (rail) in Germany (%) 94.6 94.8 – – Punctuality DB Long-Distance (%) 81.0 78.4 – – Passengers (million) 1,294 1,151 + 143 + 12.4 thereof in Germany 1,030 1,006 + 24 + 2.4 thereof DB Long-Distance 68.3 66.7 + 1.6 + 2.4 Volume sold (million pkm) 46,536 44,037 + 2,499 + 5.7 Volume produced (million train-path km) 391.5 377.3 + 14.2 + 3.8 RAIL FREIGHT TRANSPORT Freight carried (million t) 139.2 140.2 – 1.0 – 0.7 Volume sold (million tkm) 47,756 47,830 – 74 – 0.2 RAIL INFRASTRUCTURE Punctuality in Germany 2) (%) 94.2 94.2 – – Punctuality DB Group (rail) in Germany (%) 94.5 94.6 – – Train kilometers on track infrastructure (million train-path km) 534.2 531.4 + 2.8 + 0.5 thereof non-Group railways 164.3 158.4 + 5.9 + 3.7 share of non-Group railways (%) 30.8 29.8 – – Station stops (million) 76.4 75.9 + 0.5 + 0.7 thereof non-Group railways 18.0 17.4 + 0.6 + 3.4 BUS TRANSPORT Passengers (million) 1,060 1,040 + 20 + 1.9 Volume sold 3) (million pkm) 3,701 4,087 – 386 – 9.4 Volume produced (million bus km) 815.4 823.1 – 7.7 – 0.9 FREIGHT FORWARDING AND LOGISTICS Shipments in European land transport (thousand) 50,751 50,712 + 39 + 0.1 Air freight volume (export) (thousand t) 613.1 550.6 + 62.5 + 11.4 Ocean freight volume (export) (thousand TEU) 1,063.4 976.3 + 87.1 + 8.9 OTHER KEY FIGURES Order book passenger transport as of Jun 30/Dec 31 (€ billion) 94.1 92.1 + 2.0 + 2.2 Rating Moody’s /S&P Global Ratings Aa1/AA– Aa1/AA– – – Employees as of Jun 30 (FTE) 307,565 302,692 + 4,873 + 1.6 1) Change in method at the end of 2016 [2016 INTEGRATED REPORT, PAGE 84 F.] with retroactive adjustment. 2) Non-Group and DB Group train operating companies. 3) Excluding DB Arriva. DB2020+ strategy Our customers benefit from first-class and environmentally friendly mobility and logistics solutions driven by dedicated employees and digital expertise. Environmental dimension Eco-pioneer Social dimension Top employer Economic dimension Profitable quality leader WE DRIVE PROGRESS AND SHAPE THE FUTURE Culture of quality Operational excellence and customer focus Digital expertise Innovative solutions in our core and new businesses High performance Shared responsibility and strong performance Contents 1 Chairmanʼs letter 2 Interim Group management report (unaudited) 2 Overview 2 DB Group 5 Business and overall conditions 12 Profitable quality leader 21 Top employer 23 Eco-pioneer 25 Development of business units 47 Additional information 48 Opportunity and risk report 48 Events after the balance sheet date 49 Outlook 52 Consolidated interim financial statements (unaudited) 52 Consolidated statement of income 53 Consolidated balance sheet 54 Consolidated statement of cash flows 55 Consolidated statement of changes in equity 56 Segment information according to segments 58 Notes to the consolidated interim financial statements U5 Contact information and financial calendar ≈ Cover image: VDE 8 – ICE on the Scherkondetal bridge In 1991, after the reunification of Germany, the Fed- eral Government created the German unification transport project no. 8 (Verkehrsprojekt Deutsche Einheit; VDE) in order to improve transport connec- tions by rail between east and west and between north and south. The new expansion line, approxi- mately 500 km long, between Nuremberg, Erfurt, Leipzig/Halle and Berlin will be fully operational on December 10, 2017. The new high-speed line provides a competitive and environmentally sound alter- native to travel by road and plane Berlin – ­­Munich in under four hours – the service offered byDB Group from De­­cember 2017 will make traveling easier and more comfortable, directly benefiting about 17 mil- lion people in Germany. CHAIRMANʼS LETTER Dear ladies and gentlemen, Deutsche Bahn continued to become more attractive our favor, but mentally we have not yet taken off. We in the first half of 2017. The successes achieved in our have made achievements in some areas, but in others, RAILWAY OF THE FUTURE quality program are we still face challenges. We must continue working in becoming increasingly visible. In the first half of 2017, these areas with discipline and focus – keeping in more than 68 million passengers used our long-dis- mind the objective of making DB Group a bit better tance trains – more than ever before in a first half-year. every day. QUALITY LEADER PROFITABLE Revenues and profits also developed positively. Rev- We are investing, where improvements are noticeable ¿ enues of € 21.1 billion and adjusted EBIT of € 1.2 bil- for the customer. € 5.5 billion are being spent on the lion are evidence of our success. Revenues increased modernization and maintenance of stations – more by 5.2 percent, and EBIT was up by an impressive than ever before. 17.1 percent. We are particularly pleased that improve- A fundamental step forward for our customers is the ments were achieved broadly across our business commissioning of the new ICE high-speed connection units, and in particular our international activities Berlin – Munich and the parallel occurring introduc- DB Arriva, DB Cargo, and DB Schenker. tion of the ICE 4 in December 2017. For this reason, we have been more ambitious in for- We are also continuing to make progress in digitaliza- mulating our forecast for the 2017 financial year. We tion. We are working with start-ups and technology intend to increase revenues to over € 42.5 billion and partners to develop new business models. The aim achieve an EBIT of at least € 2.2 billion. This is € 1 bil- here, too, is to further improve quality and service for lion more revenues and € 100 million more EBIT than our customers. previously achieved. One thing is clear: we are on the right path, but not We are also on the right path in terms of punctuality. EMPLOYER TOP yet at the finish. We will do everything we can to In long-distance transport, we achieved an aver­­age † main­­­tain the positive momentum and continue the punctuality of 81.0 percent in the first half of 2017. upward trend. This is what drives us. This is our ambi- This is 2.6 percentage points more than in the first tion. Because in the interest of our customers the focus half of 2016. In regional transport, punctuality re- in 2017 will be no less than: Quality that persuades! mained stable at the high level of 93.2 percent. Over- all, however, we are still not satisfied with the devel- Sincerely yours, op ment of our punctuality. More effort is needed in this area to allow us to provide even better and more reliable service to our customers. Conclusion: The numbers confirm Dr. Richard Lutz that we are on the right path – our CEO and Chairman RAILWAY OF THE FUTURE program of the Management Board is succeeding. We have the wind in of Deutsche Bahn AG ECO-PIONEER “The numbers confirm that we ¥ are on the right path – our Railway of the Future program is succeeding.” Deutsche Bahn Group – Interim Report January – June 2017 INTERIM GROUP MANAGEMENT REPORT Interim Group management report (unaudited) Overview Railway of the Future Financial indicators Good development program successful with clearly in noise reduction positive development and air quality control ≈ ¿ Profitable ≈ † Top employer ≈ ¥ Eco-pioneer quality leader ◊ Number of employees ◊ Development of a new ◊ Punctuality data positive increased further. climate protection target in compared to 2016. ◊ New employer branding cooperation with the ◊ Passenger record campaign started. science-based targets initiative. in long-distance transport. ◊ Two regional Railway ◊ DB Cargo achieves good ◊ Revenues and EBIT improve of the Future workshops progress in noise reduction. significantly. carried out. ◊ DB Regional operates largest bus fleet with Euro VI emissions standard. DB Group New Chief Executive Officer Strategy DB2020+ sets Railway of the Future improves named the right focus quality and performance ≈ Changes in the executive bodies 2017. Parliamentary State Secretary Uwe Beckmeyer (Federal Ministry of Economics and Energy, BMWi) was appointed ≈ Changes in the Management Board as her successor to the Supervisory Board of DB AG with The appointment of Dr. Rüdiger Grube as a member of the effect from March 3, 2017. Management Board of DB AG was rescinded by mutual Fred Nowka resigned his Supervisory Board mandate with agreement with effect from January 30, 2017. effect from April 30, 2017.